Forbes: Can you say how long this unbundling announcement has been in the works?

Mehdi: Over the last couple months we’ve been having discussions about how we can continue to iterate on the program.

Does it have anything specifically to do with the recent change in leadership with Phil Spencer taking over?

Not really, for years now we’ve been trying to be very customer focused, looking to our fans and taking their feedback. You can track all the way back to E3, where after we got out we had a lot of good feedback about how you can play games, used games, and online connectivity. We’ve been very responsive, and this is consistent with that approach.

You do seem a lot more responsive to fan feedback than most. In doing that, how do you balance your own vision for the Xbox One with what fans want, which has proven to be quite different at times? Where do you draw the line?

Yeah, that’s a tough call. I think in general we prioritize listening to our customers and being fan-driven. I think that’s really the key. But look, a lot of times when you’re trying to pioneer a new system or new technology, it’s harder. You have to take some risks, outline your vision for the future and share it with customers. Hopefully when you do, they see [your vision]. The good thing about our fans is that they know their stuff, the games, the system, and they’re good guides as to how to take the system forward.

So now that Kinect is optional and there’s a $399 price point, there are a lot of comparisons to PS4. What do you view as your main differentiator now if someone’s buying a standalone Xbox One system compared to PS4? The consoles are starting to seem pretty similar these days, especially in the wake of this announcement.

I think there are four main areas in terms of how ours system is differentiated. First is that the reason people buy these consoles is to play games. We’ve got the best games line-up. We had the best games line-up this past holiday if you talk to most experts in the games industry. As we go into E3, you’re going to see an incredible games line-up. Knock on wood, I believe we’re going to have a great games line-up for this coming holiday as well.

Second thing is people buy games to play with their friends. We have had the best multiplayer gaming system in this space for many years with Xbox Live Gold. We’ve really set the standard. You get better matchmaking capability with SmartMatch, you get better protection against people who cheat. Xbox Live Gold is the best place to come play with your friends.

Third is the original vision we had for Xbox One, which is an all-in-one entertainment device, and it still is, even with the $399 SKU. You still get Xbox One as an input one device where you can still watch live TV, do two things at once, input switch. A lot of the things you do with entertainment you just can’t even do on other systems. We’re really built for the future.

And finally you can still add on Kinect to create all these additional experiences with voice commands, biometric recognition, recording gameplay and more.

Those four things make it very differentiated, and now that the price points are the same, and people looking at games and entertainment experiences are future-proofing, I feel that we have a very differentiated system.

Both the PS4 and Xbox One have sold very well, but there’s been a bit of a sales gap. Do you view that it’s mostly due to the cost, and now that the price is lower on the unbundled Xbox One, you’ll gain a bit of ground on Sony?

It’s hard to really assess the gap in sales. They’re in many more markets right now than we are. They’re in 40+ markets, we’re in 13. People have been more satisfied with the Xbox 360 than the PS3, so in that respect people have less of a need to upgrade in the short term due to regular updates for the Xbox 360. We could point to any number of things. That said, we’ve heard from a lot of our Xbox fans who say, “Hey look, I want an Xbox One, but at $499, I probably have to wait a little while before I can afford to get one.” I do think we’re going to get people now who move over, and then buy the Kinect later. So I do think the [price point] broadens the appeal and hopefully brings more people to Xbox One sooner.

In the wake of this, now that the price has been lowered and you’ve said people are waiting to buy it, do you think that at launch it was a mistake to bundle the Xbox One with the Kinect at a higher price?

No, I think it was the right call to bundle with Kinect. In the beginning of a new console generation, you’re trying to set the bar for a new experience, and I think we did that with Xbox One. The proof is really in the usage. 80% of people are using Kinect which is remarkable compared to the last generation. We’re doing 120 voice commands on average a month with over a billion commands issued. People who wanted the experience came and bought it. We were sold out all through the holidays. I think it was the right call, and now is a good time to offer more choice for people who haven’t been able to get that experience.

What do you see as the future of Kinect here going forward? Do you think that it’s lived up to its potential or struggled in some ways?

The way I look at it is that you should take a five year vision. I think in five years, we will laugh at any computing device you can’t walk up to and talk to. Voice is going to be there for all devices. We’re a pioneer with Kinect in the living room. And it’s not just voice, and it’s voice and biometric ID. The ability to pioneer that, and with the success we’ve had so far with five million people, it’s remarkable. We feel great about it. And look, we’re going to learn a lot, and our partners are going to learn a lot, and our customers are going to learn a lot, and we’re going to continue to shape it. But I think we’re breaking a lot of new ground and we’re delighted with the progress.

Do you worry that now that the Kinect is optional, there may be less developer support for it as they make games going forward?

One thing I should say is that we made this decision in conjunction with our games publishers and our entertainment partners. As you can imagine, we have really strong relationships. The two of us looked at the problem the same way. We love Kinect, we love the way it’s going and the possibilities. At the same time, we also wanted to have a broadened base of users. Some games are fully Kinect-based, and some are better when you use Kinect, but can also work fine without it. In each of those cases, this is still the right call.

A price cut for the Xbox One was rumored for a while and everyone was wondering how you’d do it. When you were devising ways knock the price down, was removing Kinect the only thing on the table, or were there other options considered?

The way we think about this is that the ability to offer more choice as to how you package these bundles is a no-brainer. This way we’re allowing more people to come and try it, and based on the feedback we’d gotten, that made sense. Certainly, it’s part of the general marketing of Xbox One. We’ve had promotional offers with games included with Xbox One. If you look back to Xbox 360, we’ve done temporary price reductions. We’re going to be doing those throughout the lifecycle of the console. The way I think about this is that you’re repackaging to allow you to have a better opening price.

Lol at the people aren't upgrading to xbone because 360 owners are more satisfied than ps3 owners... hello! 360 owners are jumping ship, because of the initial announcement of drm, the price gap, and equally important the hardware gap.

As much as I love to rail MS for getting it so wrong this gen, I will at least say this. Their turnaround for the XBone seems to be genuine. If they went on talking about being pro-gamer while continuing to keep the Kinect bundled, I'd really skewer them and their blind followers bad after E3.

So, here's a kudos to Microsoft for acting upon getting things wrong rather than just talking about it. After all, talk is cheap.

Shrugs. Company men say company things. Is anyone shocked. As a Kinect owner and someone who enjoys it, I'm happy they will continue to work with the device. For those that don't care, they won't need it or have to pay for it. All is well.

80+ million sold for 360 and ps3.

7+ million for PS4. 4+ million for Xbox One.

Tons haven't upgraded yet for both sides. He's trying to appeal now to those who bought 360 last time, which is his job. This interview isn't a big deal. As I said, its a company man being a company man. Ken Kutaragi told Cows to go get a second job to afford the PS3, lol. It is what it is.

As much as I love to rail MS for getting it so wrong this gen, I will at least say this. Their turnaround for the XBone seems to be genuine. If they went on talking about being pro-gamer while continuing to keep the Kinect bundled, I'd really skewer them and their blind followers bad after E3.

So, here's a kudos to Microsoft for acting upon getting things wrong rather than just talking about it. After all, talk is cheap.

Bloody hell Shew, well said mate. I still think $399 for a weaker machine is too much in the long run. They need to be at a cheaper price point than the PS4 to compete.

Lol at the people aren't upgrading to xbone because 360 owners are more satisfied than ps3 owners... hello! 360 owners are jumping ship, because of the initial announcement of drm, the price gap, and equally important the hardware gap.

I agree, but do you expect a company man to say that? Come on people. We point these lies out like we would do it differently, getting his paycheck.

Lol at the people aren't upgrading to xbone because 360 owners are more satisfied than ps3 owners... hello! 360 owners are jumping ship, because of the initial announcement of drm, the price gap, and equally important the hardware gap.

I agree, but do you expect a company man to say that? Come on people. We point these lies out like we would do it differently, getting his paycheck.

Yeah, but at the same time, as gamers we try to plug out of our overly political worlds as much as possible and play by different rules. There's never an honest reason to accept dishonest bullshit.

Lol at the people aren't upgrading to xbone because 360 owners are more satisfied than ps3 owners... hello! 360 owners are jumping ship, because of the initial announcement of drm, the price gap, and equally important the hardware gap.

I agree, but do you expect a company man to say that? Come on people. We point these lies out like we would do it differently, getting his paycheck.

Yeah, but at the same time, as gamers we try to plug out of our overly political worlds as much as possible and play by different rules. There's never an honest reason to accept dishonest bullshit.

The one that works for me is knowing I have bulshitted in this life. Judge not, lest yee be judged yourself. LOL. Nobody has to accept it. Just a kind of mental masturbation pointing it out like "oh we got you" when we know the culture of business and PR. Sony did it with "The true watchdogs experience 1080p/60 fps", oh wait.... All are guilty.

Lol at the people aren't upgrading to xbone because 360 owners are more satisfied than ps3 owners... hello! 360 owners are jumping ship, because of the initial announcement of drm, the price gap, and equally important the hardware gap.

I agree, but do you expect a company man to say that? Come on people. We point these lies out like we would do it differently, getting his paycheck.

I understand, still find it annoying. The moves are pretty good so far, no complaints there. Sunset bungaloo at $350 on black friday would get my purchase this year.

The Xbone OS has Kinect taking up a good chunk, so even with the removal of Kinect, the bottlenecks won't change. They have to keep standards for us early adopters that have a Kinected Xbone and for future Kinect buyers.

Still, a lower price point is what people wanted...although this new $399 pricepoint won't be making new ground. Technically, we've seen $399 Kinected Xbones with Titanfall bundles + free Forza/TF bundles at Amazon, M$ stores, and other retailers. Those models were on sale for $400 with Kinect included.

I was hoping for a $299-$350 sku considering the shortage of power and cheaper components and removal of Kinect. They really could move some units at $299-$350 plus it would put Sony in a hot seat. Matching Sony's price doesn't do as much damage as they still have the "more power for the same price" argument.

Here's a picture of a $399 Titan Fall bundle from Microsoft's Store back in MARCH 2014.

why would anyone (except for lems) trust anything m$ say? they change their strategy all the time, this is how sega got out of the console business. if only history could repeat itself

sega never changed stances or strategy. They just had serious issues with communication. It was so bad that they launched the 32x and Saturn nearly at the same time because half the company didn't know the 32x even existed while the other half had no idea about the saturn's launch date.

I wonder what will happen if this price cut doesn't give them the results they wanted like how Titanfall didn't. Will they start giving free massages with Xbones?

The Xbone was essentially $400 for the entire month of March. It was $450 at every retailer with Titanfall and Kinect included and that didn't spark sales. Consumers are smart enough to know which console is more powerful and don't want to pay the more or even the same for much weaker hardware. Would you buy a Ford Fusion if a Ferrari was the same price? Thats how people look at it.

Dropping the Kinect, removing the Gold requirement for streaming apps, adding games with gold to X1... Then you go back and look at all he other reversals MS has implemented in the last year and it's absolutely astounding how badly they implemented almost every aspect of their new platform.

No lie, they owe Sony a thank you for showing them the right way to proceed over and over again, because everything they've "adjusted" has been to replicate Sony's existing model.

I will say that this just shows Spencer is the right guy for the job. Where we've had other executives hold onto terribly implemented and highly unpopular ideas, Spencer got working immediately on fixing every obvious shortfall the XB1 had compared to the PS4. Well, except power, and unfortunately he got the job too late to do anything about that. If he is as committed to improving their exclusive content as he has been in reversing MS's boneheaded moves, it could mean great things for XBoners going forward.

The Xbone OS has Kinect taking up a good chunk, so even with the removal of Kinect, the bottlenecks won't change. They have to keep standards for us early adopters that have a Kinected Xbone and for future Kinect buyers.

Still, a lower price point is what people wanted...although this new $399 pricepoint won't be making new ground. Technically, we've seen $399 Kinected Xbones with Titanfall bundles + free Forza/TF bundles at Amazon, M$ stores, and other retailers. Those models were on sale for $400 with Kinect included.

I was hoping for a $299-$350 sku considering the shortage of power and cheaper components and removal of Kinect. They really could move some units at $299-$350 plus it would put Sony in a hot seat. Matching Sony's price doesn't do as much damage as they still have the "more power for the same price" argument.

The Xbone OS has Kinect taking up a good chunk, so even with the removal of Kinect, the bottlenecks won't change. They have to keep standards for us early adopters that have a Kinected Xbone and for future Kinect buyers.

Still, a lower price point is what people wanted...although this new $399 pricepoint won't be making new ground. Technically, we've seen $399 Kinected Xbones with Titanfall bundles + free Forza/TF bundles at Amazon, M$ stores, and other retailers. Those models were on sale for $400 with Kinect included.

I was hoping for a $299-$350 sku considering the shortage of power and cheaper components and removal of Kinect. They really could move some units at $299-$350 plus it would put Sony in a hot seat. Matching Sony's price doesn't do as much damage as they still have the "more power for the same price" argument.

Here's a picture of a $399 Titan Fall bundle from Microsoft's Store back in MARCH 2014.

I never saw those deals.

I'm sorry to hear that. One loyal and very hardcore Xbox super fan such as you deserved to at least see these deals that were constantly popping up in SW. I'm not sure how you missed them all and yet I stumbled on 20+ Xbone sales threads without even trying. I wasn't even shopping for an Xbone, I already had one.

There were threads in SW all the time (not to mention at various websites). I could have sworn I saw you in a few of them. I am tempted to link them, but you dig around if you want. I commented in a few of them including the Target Xbone thread, Fry's Electronics Xbone thread, and a Microsoft retail store Xbone sales thread. That's three, but I saw more then that.

There was a Walmart and Best Buy Xbone sale thread too. Here's one deal that was in SW (Best Buy/Walmart Xbone sale). Jeez, probably 20+ threads I saw here, but I can't be looking them up for you now. Instead, I'll show you a link from M$ directly when they were selling Titanfall Xbones back in March for $399. They weren't the only ones, but hopefully you get an idea of deals you missed.

Check this out $399 Xbone TitanFall bundle from M$ store directly way back in MARCH 2014.

Sorry you missed out on good deals for Xbone buddy, I know you are in the market for an Xbone and you were very dedicated to 360 all these years. You'll get one, I believe in you. Good luck looking for a good deal on Xbone Xhawk. Perhaps look for FUTURE XBONE Holiday bundles after Thanksgiving or Xmas.

The 360 hasnt had any relevant games in years, PS3 was still getting world class exclusives very late in its life cycle, thats a bullshit excuse from Microsoft.

Microsoft has basically made a PS4 clone but weaker, So Lemmings, instead of buying that weak rip off, why dont you just buy the original?

But can the PS4 do Live TV? Does it have an HDMI input, Does it have a snap feature? Can you do two things at once on the PS4?

Yes, you can do two things at once on PS4. It's pretty well known and very easy. You hit the PS button and you are back to the main menu. In fact, have you messed with a Vita, it has a similar feature prior to Xbone and PS4. Although, the PS4/Xbone do it better than the Vita, the Vita did it quite well. Sony just didn't name the feature "snap".

No, the PS4 doesn't do Live TV as you know, you have to change the channel instead.

The PS4 only has one HDMI input instead of the two my Xbone has...but there is a drawback to using it. Lower resolution and having to have your Xbone on to watch TV which isn't good for longterm (years) use.

The 360 hasnt had any relevant games in years, PS3 was still getting world class exclusives very late in its life cycle, thats a bullshit excuse from Microsoft.

Microsoft has basically made a PS4 clone but weaker, So Lemmings, instead of buying that weak rip off, why dont you just buy the original?

But can the PS4 do Live TV? Does it have an HDMI input, Does it have a snap feature? Can you do two things at once on the PS4?

Why the fu** do i need a xbox one to watch TV,i just freaking hook my sat box to my TV there problem solve i only use 2 devices to watch TV not 3,watching TV though the xbox one is a redundant loss loss of time,worse without kinect you can't issue voice commands any more.

Does MS make good products anymore? Xbox is inferior to PS4, Surface is inferior to quite a few tablets, their phones are 2nd tier to Apple, HTC, and Samsung, and Windows 8 is disgusting. Ya it still makes a lot of money off of its OS but honestly, I don't think it's had a product that's actually GOOD for a long time.

Not really. 7+ million is more than 5 million, you insufferable blockhead. Lol.

I think he was talking about making a more intellectual analysis than simply saying 7 million is greater than 5 million. But then again, that is why he is in that position, and you are...well...

@Shewgenja said:

As much as I love to rail MS for getting it so wrong this gen, I will at least say this. Their turnaround for the XBone seems to be genuine. If they went on talking about being pro-gamer while continuing to keep the Kinect bundled, I'd really skewer them and their blind followers bad after E3.

So, here's a kudos to Microsoft for acting upon getting things wrong rather than just talking about it. After all, talk is cheap.

I agree with you. I am glad to see Microsoft make this move in attempt to listen to its fan base. With that said, I am still undecided about the X1 and PS4. The value just isn't there for me, yet.

As much as I love to rail MS for getting it so wrong this gen, I will at least say this. Their turnaround for the XBone seems to be genuine. If they went on talking about being pro-gamer while continuing to keep the Kinect bundled, I'd really skewer them and their blind followers bad after E3.

So, here's a kudos to Microsoft for acting upon getting things wrong rather than just talking about it. After all, talk is cheap.

Bloody hell Shew, well said mate. I still think $399 for a weaker machine is too much in the long run. They need to be at a cheaper price point than the PS4 to compete.

Not really. 7+ million is more than 5 million, you insufferable blockhead. Lol.

If only they took SONY's lead "First is that the reason people buy these consoles is to play game" and That's where SONY shined. By gamers FOR gamers, the SONY way, then you couple that with Live, Learn and Love that SONY teaches us and it's no wonder has had to shit can Kinect(lol).

As much as I love to rail MS for getting it so wrong this gen, I will at least say this. Their turnaround for the XBone seems to be genuine. If they went on talking about being pro-gamer while continuing to keep the Kinect bundled, I'd really skewer them and their blind followers bad after E3.

So, here's a kudos to Microsoft for acting upon getting things wrong rather than just talking about it. After all, talk is cheap.

As much as I'd wish their words were genuine, they're a big corp and this is most likely all BS. They haven't done anything proactive to appeal to gamers. Everything they've done to date has been reactionary since they got it all wrong from the start. Doubt they're sorry. They probably had 10 Harvard statisticians come in and calculate that breaking the news of the Xbox SKU in mid May 2014 was the best way to get sales.